The best 25 funds for your Isa – picked by our experts
It's tough for investors right now. Inflation remains at levels not seen since the 1960s. War continues to rage in Europe, the banking sector has been rocked and businesses remain paralysed by fear over whatever the next economic shock will be.
In a changing world, investor portfolios must change with it; even amid uncertainty, decisions have to be made.
Telegraph 25, the list of our favourite investment funds, has always been designed to withstand a changing world. It is a mixture of funds that we believe will grow your money in the long run, funds that provide income, strategies that will save your savings when markets fall and funds we think offer an exciting opportunity.
And once you've picked what funds you want in your Isa, use our heat map to work out whether you could be saving money by switching Isa providers.
We aim to choose funds that can stand the test of time. Even with so much uncertainty right now, these will do what we need them to.
As ever, investors must remember this list is not an off-the-peg portfolio to pump your money into and forget about.
DIY investing requires you to understand the risks you are taking and conduct your own research to ensure that an investment fits your needs and blends with others that you already hold.
Neither do we recommend buying all the funds on the list at the same time. The funds, and their aims, must be considered and match the aims and objectives of the investor.
Some funds on the list have been chosen expressly because they can be relied on to do several jobs well without the need for close monitoring. Others, however, take more risk by design.
The Telegraph 25 is designed to highlight investments that are the best in the field they operate in and we believe will give the best returns for the risk being taken. Unless we make clear to the contrary, they are intended for long-term investors who want a home for their money for five, 10 or even 20 years.
We have divided the list into five sections: British funds, world funds, income funds, “get rich slow” funds and “wild cards”.
1. iShares UK Equity Index
“Passive” funds, which track the performance of a particular market rather than employ a fund manager to try to beat it, are a low-cost option. For access to Britain’s stock market, this fund is hard to match.
Charge: 0.05pc | Cheapest share class: D | Five-year return: 24.7pc
2. Jupiter UK Alpha
This fund’s name has changed repeatedly but the manager has stayed the same. Richard Buxton has invested in Britain’s biggest blue-chip stocks for more than three decades and his “value” investment style has recently come back into favour: the fund is among the top 25 per cent of its peer group over one, three and five years, according to FE Fundinfo, a fund information service.
Charge: 0.85pc | Cheapest share class: I | Five-year return: 21.8pc
3. Liontrust Special Situations
Managers Anthony Cross and Julian Fosh invest in British companies of all sizes and few have matched their record over the past decade. Their fund is among the best 25 per cent of the peer group over five years.
Charge: 0.81pc | Cheapest share class: I | Five-year return: 29.6pc
4. Fidelity Special Values
Alex Wright, manager of this investment trust, has returned to form after years of struggle; the fund has outperformed 75 per cent of rivals over one, three and five years. Value stocks remain Wright's bread and butter and his longer-term record is impressive. Underpriced small and medium-sized British firms feature, as do FTSE 100 blue chips.
Charge: 0.69pc | Ticker: FSV | Five-year return: 21.7pc
5. Marlborough UK Micro Cap Growth
An option for those who want to benefit from the growth offered by Britain’s smallest companies. Veteran Giles Hargreaves has stepped down from the fund but his successors invest in the same way. However, performance has slipped over the past two years and the fund is only in the upper half of its peer group over three and five years. It's one we'll keep an eye on.
Charge: 1.55pc* | Cheapest share class: P | Five-year return: 8.1pc
6. Legal & General International Index Trust
This passive fund invests in more than 2,000 companies that make up overseas stock markets. Held alongside the iShares UK Equity Index fund, it would give investors access to the world’s shares at a low cost.
Charge: 0.13pc* | Cheapest share class: C | Five-year return: 54.7pc
7. Scottish Mortgage
This standout trust made its name backing fast-growing companies that revolutionised their industries. The portfolio is struggling at the moment but that should not deter investors: few funds have the same depth of experience in identifying the small group of truly world-changing companies, such as Tesla and Moderna.
Low charges and access to unlisted companies make this a must-have in any growth portfolio.
Charge: 0.32pc | Ticker: SMT | Five-year return: 66.7pc
8. Fundsmith Equity
Investment star Terry Smith’s mantra of “buy good companies, don’t overpay, do nothing” has delivered stellar long-term returns. As a “growth” fund it has suffered recently but less so than many rivals and it remains among the top 25 per cent of its peer group over five years. It remains worthy of its relatively high charge.
Charge: 0.94pc | Cheapest share class: I | Five-year return: 62.9pc
9. JP Morgan Emerging Markets
Veteran manager Austin Forey, an investor in emerging markets since 1994, runs this £1.4bn investment trust. An outperformer during the pandemic, returns have become more in line with rivals over the past year, so while it remains on our list for now it's another one to monitor.
Charge: 0.84pc | Ticker: JMG | Five-year return: 38pc
10. The Global Smaller Companies Trust
Its heritage stretches back 133 years (it formerly bore the BMO name and is now run by Columbia Threadneedle) and this investment trust offers access to smaller stocks traded on markets around the world. If you invest for long periods, smaller companies have historically tended to produce better returns than larger ones. Manager Peter Ewins invests in funds run by specialists, including those not available to DIY investors.
Charge: 0.88pc | Ticker: GSCT | Five-year return: 18.2pc
11. iShares Core S&P 500 Ucits ETF
The US market is hard to beat, as managers and their investors have found out. This passive exchange-traded fund tracks the S&P 500 index of the largest stocks in the world’s biggest economy at a very low cost.
Charge: 0.07pc | Ticker: CSP1 | Five-year return: 73pc
12. Baillie Gifford Positive Change
This relatively young fund delivered high returns from fast-growing companies during the pandemic but is another to have fallen hard since, although it remains a top-25 per cent performer over three and five years. It deserves consideration, even if the social impact of investments is not a primary concern.
Charge: 0.54pc | Cheapest share class: B | Three-year return: 115pc
13. Premier Miton European Opportunities
Yet another fund to have had a strong pandemic, only to slip back since. While the fund, which focuses on quality companies the managers hold for a long time, remains in the top 25 per cent of peers over three and five years, it's one to monitor.
Charge: 0.82pc | Cheapest share class: B | Five-year return: 62.5pc
14. TR Property
TR Property is an unusual trust in that the bulk of its portfolio is made up of shares in European property companies but it also owns some buildings in the UK. Managed by the veteran investor Marcus Phayre-Mudge, it yields 4.4pc and crucially held its dividend during the pandemic and recent market falls, making use of its reserves. Like all property funds, this one has suffered severe falls over the past year but for those who want exposure to the sector it remains a firm choice.
Charge: 0.84pc | Ticker: TRY | Five-year return: -1.5pc
15. New: BioPharma Credit
This unusual listed fund lends money to young drug companies, often before they have had a commercial success. While this may sound risky, the fund has never suffered a default. Yet it can charge high rates on its loans, hence its own generous yield of 7.3 per cent. It replaces the TwentyFour Dynamic Bond, whose performance had become pedestrian and whose yield is lower.
Charge: 1.2pc | Ticker: BPCR | Five-year return: 38.9pc
16. Artemis Income
Offering a yield of 4 per cent, this £4.1bn fund has consistently beaten the average returns of rivals and the stock market. Managers Adrian Frost and Andy Marsh invest predominantly in FTSE 100 stocks and have decades of experience between them.
Charge: 0.8pc* | Cheapest share class: I | Five-year return: 25pc
17. Man GLG Income
Henry Dixon, manager of the £1.4bn fund, does not confine his search for income to blue chips: British “mid-cap” and smaller stocks make up almost 40 per cent of his portfolio. Between his experience, a yield of 5 per cent and the fund holding up in tough markets, it remains an evergreen and reliable option.
Charge: 0.9pc | Cheapest share class: D | Five-year return: 25pc
18. Invesco Monthly Income Plus
A mix of bonds with a small portion of shares (currently around 8 per cent) produces this fund’s 5.7 per cent yield, paid monthly. The £2bn portfolio produces income from a range of sources, offering something different from rivals.
Charge: 0.67pc* | Cheapest share class: Y | Five-year return: 13.2pc
19. City of London
No investment trust boasts a better dividend record than City of London. It has raised its payout in each of the past 56 years and offers a high yield of 4.7 per cent.
It invests mainly in British stocks that belong to the FTSE 100. The trust is a solid income pick and remains a firm favourite.
Charge: 0.74pc | Ticker: CTY | Five-year return: 23.9pc
20. New: Personal Assets
“Our policy is to protect and increase (in that order) the value of shareholders’ funds over the long term.” So runs this investment trust's mission statement and, while no investment can offer a completely smooth ride, it has delivered on it admirably over the long term. It replaces RIT Capital Partners, whose large holdings in relatively immature unquoted businesses recently caused this newspaper's Questor column to question its wealth preservation credentials and rate it a “sell”.
Charge: 0.73pc | Ticker: PNL | Five-year return: 26.2pc
21. Vanguard LifeStrategy
Few options are cheaper and simpler than Vanguard’s LifeStrategy range for passive investors. Each of the five portfolios invests a different portion in shares, from 20 per cent to 100 per cent, with the remainder held in bonds. Both portions of each fund are invested in Vanguard tracker funds. About the simplest and cheapest “multi-asset” fund you can find.
Charge: 0.22pc | Cheapest share class: A | Five-year return: 21.4pc (60pc shares)
22. Ruffer Investment Company
This proved its mettle in 2008, rising when markets tumbled, and has done so again recently. Falling stock markets are the managers’ bread and butter. A great defensive option.
Charge: 1.07pc | Ticker: RICA | Five-year return: 38.6pc
23. HarbourVest Global Private Equity
Private companies are usually out of reach for DIY investors, but can be accessed through trusts such as this. It buys other funds, offering a slice of thousands of unlisted firms, so it is effectively a tracker fund for private businesses, which over the long term have tended to produce higher returns than their quoted counterparts. Investors should be prepared for volatility, however.
Charge: 2.33pc | Ticker: HVPE | Five-year return: 76.3pc
24. Biotech Growth
Biotechnology stocks have offered great returns and diversification in the past decade. Few funds picked as many winners as this one. The specialist portfolio is strictly for the adventurous, however, with holdings in small and unknown stocks that may shine in future.
Charge: 1.1pc | Ticker: BIOG | Five-year return: 19.9pc
25. Fidelity China Special Situations
Dale Nicholls, the manager, has a strong record in China, one of the world’s fastest growing economies.
Charge: 1.04pc | Ticker: FCSS | Five-year return: 25.2pc
*Fund is available at a lower cost on Hargreaves Lansdown
What do you think of our selection? Have we missed out any of your favourite funds, or been too kind to some managers?
Let us know in the comments section below.